ndatory (20 points) The requirement is to make adjusting entries. Assume that the D-Toys Ltd. has a December 31 fiscal year- end and the accounting period is one year (=financial statements are prepared only at year-end, -adjusting entries are prepared only at year-end). First, provide the corresponding adjusting entries for D-Toys Ltd at the fiscal year end, Dec 31, 2018 in the box following "Adjusting entry:" Debits first and then credits. Since only one row is allowed in the box, put debits and credits in the same row. But identify debits and credits using the symbol "Dr" and "Cr". For example, "Dr) Supplies expense S90 Cr) Supplies $90". No adjusting entries have been made before Dec 31 because the accounting period is one year rather than one month or one quarter. Second, in the absence of the adjusting entry, evaluate what would happen to the assets, liabilities and equity of the D-Toys Ltd at the fiscal year-end date using the following words: "Overstatement" or "Understatement" following Assets, Liabilities, or Equity. When neither Overstatement nor Understatement occurs, there is no need to indicate the specific item in the box. For example, if liabilities are overstated and equity is understated, state "Liabilities: Overstatement: Equity: Understatement" in the box following "Effects without adjusting entry". No need to mention "Assets in the box D-Toys: (1) On Apr 1, 2018. purchased equipment for $300.000 with $100,000 paid by cash and $200.000 borrowed from banks. The purchase was already recorded on Apr 1. The life of the equipment is estimated to be 10 years. The bank loans bear 6% interest (6% is the annual interest rate) and are due one year later, April 1 2019. Both the interest and principal are paid on the due date. On Dec 31, 2018, make the adjusting entry for the bank loans interest. (Hint: 9 months of interest have incurred.) Adjusting entry: VII Effects without adjusting entry: (2) On Dec 31, 2018, make the adjusting entry for the depreciation of the equipment mentioned in (1). Assume the company uses the straight-line depreciation method. Adjusting entry: 4 Effects without adjusting entry: (3) On Apr 1. 2018, paid one year of rent in advance (S1000 per month) for renting the shopping mall spaces The coverage is from Apr 1, 2018 to Mar 31, 2019. The rent payment was already recorded on Apr 1. On Dec 31, 2018, make adjusting entry for the rent. Adjusting entry: AM Effects without adjusting entry: A/ (4) On Apr 1, 2018, received $24,000 cash in advance from a customer to play in the play area for one year. The customer can play in the play area from Apr 1, 2018 to Mar 31, 2019. The cash receipt was already recorded on Apr 1. On Dec 31, 2018, the customer's rights to play in the play area have expired for 9 months. Make the corresponding adjusting entry. Adjusting entry: Effects without adjusting entry: Adjusting entry: Effects without adjusting entry: (5) On Dec 31, 2018, two employees have 11 workdays' salaries already earned but the payment will not occur until Jan 4, 2019. Make the adjusting entry for salaries incurred on Dec 31. (The salary is $200 per person per day). Adjusting entry: Effects without adjusting entry: A Previous Page Next Page Page 5 of 5